Development of the Central Asian Microfinance Market Discussed in Almaty

Almaty hosted the Central Asian Microfinance Forum, bringing together representatives of regulators, microfinance organizations, investors, fintech companies, and industry associations from across the region. The event was attended by representatives from Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan, and other Central Asian countries.

 

Forum participants discussed the development of the microfinance market, the digitalization of the financial sector, improving access to financial services, and prospects for regional cooperation.

Opening the forum, Deputy Chairman of the Agency Olzhas Kizatov noted that Kazakhstan’s microfinance sector has undergone significant changes in recent years and has now become an important part of the country’s financial system.

 

“We are no longer talking only about consumer microcredit. We are talking about a sector that is becoming a significant source of financing for entrepreneurship, economic activity, and financial inclusion,” Kizatov emphasized.

Today, 214 microfinance organizations operate in Kazakhstan. Over the past five years, their assets have increased almost fourfold, reaching KZT 1.7 trillion. The loan portfolio stands at KZT 1.5 trillion, having grown more than 3.5 times since 2021. At the same time, around 40% of the portfolio, or more than KZT 580 billion, is allocated to business financing.

 

Kazakhstan has already established a basic regulatory framework for the microfinance market. Since 2020, all organizations engaged in microfinance activities have been subject to state regulation and supervision, while microfinance activities have been subject to licensing since 2021.

As a result, the market has undergone significant consolidation, with the number of market participants declining by more than 80%. At the same time, requirements have been introduced covering capital, prudential standards, reporting, the qualifications of senior management, and consumer protection.

“The first stage of market development — establishing a basic regulatory framework — has, overall, been completed. Today, we are facing a third-level challenge: ensuring that the microfinance market is not simply regulated, but mature and sustainable,” Kizatov said.

In this regard, the Agency is moving from a predominantly reactive approach toward risk prevention, the development of risk-based supervision, and greater accountability among market participants.

 

One of the key priorities will be strengthening risk management and internal control systems within MFIs. Organizations will be expected to assess their own risk profiles, identify risks in a timely manner, and take them into account when making management decisions.

At the same time, supervisory requirements will take into account the size of an organization, its business model, and the level of risks it assumes. One of the new instruments will be supervisory judgment, which will make it possible to assess not only formal compliance with requirements, but also the actual quality of risk management.

 

The second area of focus is the introduction of self-regulation in microfinance and debt collection activities.

A two-tier model is being proposed under which the professional community will participate in monitoring compliance with professional standards and reviewing complaints, while the Agency will be able to concentrate its resources on organizations with elevated risk levels and systemic violations.

“The purpose of self-regulation is not to replace state supervision, but to make it more targeted and effective,” Kizatov emphasized.

The third area will be further strengthening consumer protection, including protecting borrowers in cases where an MFI ceases operations, combating fraudulent microloans, and developing out-of-court dispute resolution mechanisms.

 

The fourth area is the development of conduct supervision. Its purpose is to assess how responsibly a financial institution interacts with customers throughout the entire lifecycle of a financial product — from its design and advertising to its sale, servicing, and the resolution of problem debt.

 

“We want to change the very philosophy of how financial institutions interact with their customers. Treating consumers fairly should not be viewed as an additional regulatory requirement, but as a normal part of a financial institution’s business model and corporate culture,” the Agency’s Deputy Chairman emphasized.

 

Summing up, Kizatov noted that further market development will depend not only on improving regulation, but also on the willingness of the professional community itself to raise industry standards.

 

“Our common goal is to build a mature and responsible sector in which effective risk management, fair treatment of customers, and protection of their interests become not merely regulatory requirements, but an integral part of doing business,” he concluded.